National Treasury has given the Nelson Mandela Bay Metro 14 days to prepare for the withdrawal and recalling of all transfers made since the inception of the Integrated Public Transport System (IPTS) conditional grant allocation.
The Democratic Alliance has been warning of this impending crisis and now the Metro stands to lose R3.2 billion, which is equal to nearly three years of equitable share.
This is likely to bankrupt the Metro and will result in the total collapse of service delivery and the Metro not being able to meet its obligations.
It will also pave the way for the Eastern Cape Department of Cooperative Governance and Traditional Affairs (CoGTA) to place the Metro under administration.
This crisis came to light in a scathing National Treasury letter to NMB acting City Manager Ms Nobuntu Mgogoshe, dated 16 October 2019.
The letter refers to the Municipality’s persistent non-compliance with the Integrated Public Transport Systems Grant (IPTSG) and states that IPTS funding has been used outside the frameworks stipulated in the Division of Revenue Act (DoRA).
Furthermore, the letter mentions a Deloitte and Touche forensic investigation report, which highlights that the Municipality did not confirm with Supply Chain Management (SCM) processes in procuring services from a number of service providers.
The report concludes that the majority of IPTS appointments were made through creative forms of irregular deviation processes that circumvented the SCM processes.
National Treasury is of the view that the irregularities in SCM processes, previously reported by the Auditor-General (AG), would have been properly resolved by implementing the recommendations of forensic report and acting against employees and service providers implicated.
On 13 June 2019, National Treasury wrote to the Metro and requested feedback on the recovery of Unlawful, Irregular, Fruitless and Wasteful (UIFW) expenditure and the implementation of recommendations made in the forensic report.
Treasury stated the City is facing the worst Unlawful, Irregular, Fruitless and Wasteful expenditure in the country, and in the history of the Municipality, and that this poses a fiscal risk and a risk to the stability of the Metro.
According to the National Treasury letter the Municipality’s reply made it clear that there was, at the highest level of the institution, limited understanding of the contents of Auditor-General (AG) reports regarding UIFW expenditure matters.
Additionally, the Municipality’s request for examples of sections of the DoRA that would have been contravened convinced National Treasury of “deep institutional fault lines at the highest level of the administration”.
“Given the current impasse in the City and the “gangster state” the government has become under Mayor Bobani and his coalition of corruption, DA NMB Caucus Leader, Cllr Athol Trollip, and I will endeavour to engage with National Treasury to prevent to clawing back of the entire amount, and also with CoGtA on other government-related issues,” said Rano Kayser, the DA Spokesperson for Roads and Transport.